Why GDS Is Still a Solid Pick Among China Data Center Stocks

The China data center industry is undergoing a seismic transformation, driven by the dual forces of artificial intelligence (AI) adoption and government-led infrastructure modernization. Amid this upheaval, GDS Holdings Limited (GDS) stands out as a strategic playmaker in both hyperscale and edge computing segments. With a 12% year-over-year revenue growth in Q1 2025 and a 48.6% adjusted EBITDA marginGDS Holdings Limited Reports First Quarter 2025 Results^[1], the company is not only surviving but thriving in a market projected to expand from USD 7.81 billion in 2025 to USD 41.59 billion by 2030China Hyperscale Data Center Market Size & Share^[2]. Here's why GDS remains a compelling investment thesis.

Hyperscale Dominance: Leveraging Policy and AI Demand

China's “Eastern Data Western Computing” initiative is reshaping the hyperscale landscape, aiming to shift 60% of new compute resources to low-cost western hubs by 2025China Hyperscale Data Center Market Size & Share^[2]. GDS is capitalizing on this trend through its aggressive expansion in regions like Ningxia, where it plans to scale from 30,000 to 720,000 racksChina Hyperscale Data Center Market Size & Share^[2]. The company's recent 152-megawatt hyperscale order in Q1 2025 underscores its ability to secure large-scale AI-driven projectsGDS Holdings Limited Reports First Quarter 2025 Results^[1], a critical advantage as GenAI training racks exceed 100 kW in power densityChina Hyperscale Data Center Market Size & Share^[2].

Government-mandated sustainability targets are further amplifying GDS's edge. With liquid-cooling technologies like ZutaCore's direct-chip solutions becoming mainstreamChina Hyperscale Data Center Market Size & Share^[2], GDS's modular designs and in-house construction capabilities enable rapid deployment of energy-efficient infrastructure. This aligns with national PUE (Power Usage Effectiveness) goals and positions the company to benefit from renewable energy quotas in Inner Mongolia and Gansu, where gigawatt-scale wind-solar bases are being developedChina Hyperscale Data Center Market Size & Share^[2].

Edge Computing: A Second Growth Engine

While hyperscale data centers dominate headlines, edge computing is emerging as a quieter but equally vital growth driver. The edge market is projected to grow at a 33% CAGR through 2033Edge Computing Market Size, Share | Industry Report, 2033^[3], fueled by industrial IoT (IIoT) applications and 5G adoption. GDS's carrier- and cloud-neutral model—operating 610,685 square meters of data center space in Tier 1 cities like Beijing and ShenzhenGDS Holdings Limited Reports First Quarter 2025 Results^[1]—positions it to serve low-latency needs for industries ranging from manufacturing to autonomous vehicles.

The company's DayOne international segment, now with over 530 megawatts of power commitmentsGDS Holdings Limited Reports First Quarter 2025 Results^[1], further diversifies its revenue streams. This global footprint, combined with a 75.7% utilization rate in Q1 2025GDS Holdings Limited Reports First Quarter 2025 Results^[1], highlights GDS's ability to balance domestic growth with cross-border opportunities.

Financial Resilience and Strategic Flexibility

GDS's financial performance in Q1 2025 reinforces its long-term viability. A 16.1% year-over-year increase in adjusted EBITDAGDS Holdings Limited Reports First Quarter 2025 Results^[1] and a churn rate below 1.5%GDS Holdings Limited Reports First Quarter 2025 Results^[1] demonstrate operational discipline. The company's asset monetization strategies, including its first ABS transaction in Q1 2025GDS Holdings Limited Reports First Quarter 2025 Results^[1], provide liquidity for expansion while enhancing shareholder value.

Looking ahead, GDS's IPO of its C-REIT and plans for an international DayOne IPOGDS Holdings Limited Reports First Quarter 2025 Results^[1] signal confidence in its capital structure. With USD 97.3 billion in total market value expected by 2030China Hyperscale Data Center Market Size & Share^[2], the company's dual-track strategy—self-build and colocation—ensures it can scale with minimal capex risk.

Conclusion

GDS's strategic alignment with AI-driven infrastructure, government policy, and sustainability mandates makes it a standout in a crowded market. As China's data center industry pivots toward hyperscale and edge computing, GDS's operational agility, financial strength, and geographic diversification position it to outperform peers. For investors seeking exposure to the next phase of China's digital transformation, GDS offers a compelling, well-defended growth story.